Multifamily house hacking with an FHA Loan

[Michael Celli]

Hey guys, I am new to the real estate investing game, but have been doing a decent amount of research for what would suit me best. Multifamily house hacking seems to be the initial route that I would like to go for at least the first buy. I want to try and use the calculator here on BP, but it seems like it is a bit better for conventional loans in order to vet deals. What are some good ways to incorporate the fees, like PMI and other fees, to the calculator to see if it is a good deal?

And what should I look for when it comes to these multifamily homes since the first year I would be living there and would not be having say two rental incomes in the case of a duplex. I most likely would be putting myself at a net loss for a year, but it kind of gets a little tricky when calculating if the house is a good deal. Not sure if I should be looking for something that totally covers what I have to pay with 1 rental income, since that seems a bit tough.

I just have been thinking about this for a while and wanted to get some other ideas. Thanks in advance!

[Michael Dumler]

@Michael Celli congratulations on kickstarting your pursuit for a house hack deal. Depending on your market, 2-4 unit properties can be difficult to get under contract. From personal experience and working with client's looking to house hack, the buyer pool is very competitive. Neverthelss, again, this depends on your market and buyer demand. Most investors would advocate for the house hack investment to break even, meaning income covers all expenses, thus allowing you to live "free". However, being a little more risk adverse, I would recommend buying a house hack deal even if all expenses aren't covered. As others have mentioned, wealth through real estate is built via equity growth and downpayment. As far as calculating your monthly mortgage including insurance, speak to your lender to obtain a disclosure on all fees and required monthly payments. I also like the idea of buying a property that is already rent ready or will require minimal work. As a newer investor I would not get wrapped into a big reahab project. Hope this helps!